Just-in-time manufacturing is an extension of the original concept of material flow management to reduce inventory levels.
INTRODUCTION
To maintain their competitive advantage, committed companies must face the difficulty of lowering costs and improving their quality levels.
It is important to use the right strategy in manufacturing.
The products produced by a manufacturing company have three implicit cost variables: materials, labor, and administrative costs. The one of materials is integrated by the costs of the same used in the elaboration of the product. The labor is the hours invested in the assembly, the administration includes the cost of the production.
COMPETITIVE ADVANTAGE
Define those variables in which you want to be superior to the competition and that make customers buy our products. We have five variables that will serve as the basis for achieving this competitive advantage: cost, quality, service, flexibility and innovation.
- Costs: placing low unit cost products on the market. Quality: designing reliable products and manufacturing articles without defects. Reaching the brand-quality binomial. Service: ensuring product delivery commitments both in quantity, date and price. Flexibility: adapt to variations in demand, changes in the market, and technology. Innovation: developing new products, new production technologies, new management systems.
Each company must decide with which variable it wants to compete in the market, in which it wants to be superior to the competition.
Bear in mind that the variables chosen are linked to the life cycle of the product, while in the growth phase quality and service are key to acquiring a competitive advantage, in the decline phase the price of the product is key.
THE PHILOSOPHY OF JUST-IN-TIME (JIT)
In a just-in-time system, waste is defined as any activity that does not add value to the customer. It is the use of resources above the theoretical minimum necessary (labor, equipment, time, space, energy). Excess stock, lead times, inspection, material movement, transactions, or rejections can be wasteful.
It is not a project at all, but a process. It is not a list of things to do, but a process that helps prioritize what to do. The purpose of the JIT method is to improve a company's ability to respond economically to change.
The conventional description of JIT as a system to manufacture and supply goods that are needed, when they are needed, and in exactly the quantities needed.
The Just-in-time system has four essential objectives which are:
- Attack fundamental problems Eliminate waste Seek simplicity Design systems to identify problems
Attack the fundamental problems:
| PROBLEM | JIT SOLUTION |
| Unreliable machine | Improve reliability |
| Areas with bottlenecks | Increase capacity |
| Large batch sizes | Reduce preparation time |
| Long lead times | Reduce queues, etc… by means of a drag system |
| Poor quality | Improve processes or suppliers |
The JIT approach to a machine or a process consists of reducing setup time to achieve greater capacity.
Eliminate waste:
It means eliminating everything that does not value the product. The JIT approach is aimed at eliminating the need for an independent inspection phase, emphasizing two imperatives:
- Getting it right the first time Getting the operator to take responsibility for controlling the process and taking corrective action as necessary.
The traditional approach determines upper and lower limits and if the measurement is outside the product is discarded or reprocessed. The JIT approach is to not tolerate any deviations, it passes the responsibility of detecting and correcting deviations to the operators who carry out the processes.
Eliminating waste involves much more than a single effort. It requires and demands the collaboration of a large part of the company's staff. The JIT philosophy includes input from workers when plans are formulated using their experiences and expertise.
In search of simplicity:
JIT emphasizes the pursuit of simplicity based on the principle that simple approaches will lead to more effective management. The road to simplicity covers two areas:
- Material flow Control
A simple approach to material flow is to eliminate complex routes and look for more direct flow lines, if possible unidirectional. The JIT emphasizes the need to simplify the complexity of the factory and adopt a simple system of controls.
The JIT approach, based on the use of drag-type systems, ensures that production does not exceed immediate needs, thus reducing work-in-progress and stock levels, while reducing lead times. And time that would otherwise be unproductive is spent eliminating the sources of future problems through a preventive maintenance program.
The main advantages that can be obtained from the use of the drag / kamban type JIT systems are the following:
- Reduction of the quantity of products in progress Reduction of stock levels Reduction of lead times Gradual reduction of the quantity of products in process Identification of areas that create bottlenecks Identification of quality problems Simpler management
Establish systems to identify problems:
With JIT, any system that identifies problems is seen as beneficial and any system that masks it as harmful.
Systems designed with the application of JIT should be thought of in such a way that they trigger some kind of warning when a problem arises. If we want to apply the JIT we have to do two things:
- Establish mechanisms to identify problems Be willing to accept a short-term reduction in efficiency in order to gain a long-term advantage.
The objectives of Just-in-time are usually summarized in the so-called ¨Theory of the five zeros¨, being these:
- Zero time to market Zero product defects Zero wasted time Zero paper work Zero stock
To which a sixth ¨zero¨ is usually added:
- Zero accidents
COST / BENEFIT OF THE JUST-IN-TIME APP
JIT requires very little capital investment. What is required is a reorientation of people with respect to their tasks. With the application of the JIT, all costs involved are mainly training costs. Company personnel must be aware of the philosophy behind JIT and how this philosophy influences their own role.
JIT should not be considered short term; It is a progressive campaign that seeks continuous improvement. We must bear in mind that JIT not only reduces inventory, but increases quality, customer service, and overall company morale.
JUST-IN-TIME STRATEGY
JIT is a system to make manufacturing companies operate efficiently and with a minimum of human and mechanical resources. It allows to improve quality and provide maximum motivation for problem solving. It stands for simplicity, efficiency, and minimal waste.
The JIT requires minimum security stocks in materials and products in process, therefore when it comes time to produce the product, the parts in the production process must be the best that must be obtained. This rule ensures high forecast yields on the production line. The second rule refers to the size of the production lot. The smallest batch size should always be made for any product, regardless of its production volume. These two rules constitute the pillars of the JIT operating principles. A violation of any of them would cause serious problems in the implantation of the system.
COMPLETE ANALYSIS OF UNPRODUCTIVE COSTS
The absolute elimination of unproductive costs, we must take into account the following steps:
- Performance improvement will only make sense when it is linked to cost reduction - let's look at the performance of each operator and each line. Said performance must be improved at each step and, at the same time, for the entire plant as a unit.
The real improvement in performance is achieved when the level of unproductive costs is equal to zero and a percentage of work of 100% is reached.
The preliminary step for the application of the just-in-time production system is to fully identify non-productive costs such as:
- Unproductive costs due to excess production Unproductive costs in the time of workers (unemployed) Unproductive costs for transportation Unproductive costs of the processing itself Unproductive costs of available stock (inventories) Unproductive costs due to other activities Unproductive costs in the manufacture of defective products
The definition of waste that Western companies have assumed is about "anything other than the absolute minimum resources of material, machines and labor force required to add value to the product."
Considering as absolute minimum resources:
- A single supplier, if it has sufficient capacity No people, equipment or space dedicated to repeating a job already done No safety stock No excessive execution time No one does a task that does not add value
"Only those activities that physically change products add value"
In other words, counting, moving or even inspecting are tasks that do not add value, but do add cost; therefore they are wasteful.
Another principle that must be added to the Just-in-time philosophy is the so-called continuous improvement.
THE OPERATION OF THE FACTORIES
In a factory, poor organization and poorly managed operations are manifested by a high level of stocks and long lead times.
In some factories the phenomenon is self-feeding: an order that is waiting for parts becomes very urgent and to satisfy it is completed with parts manufactured for other clients, whose orders will in turn be short of parts.
Companies must know how to respond to market expectations, for which they must manufacture the products that customers want, on time and with the level of quality they require, for a minimum price. Traditional industry does not have enough capacity for this. Its factories are lacking in agility and speed of action. The Western woman does not have the healthy habit of fighting against the causes of problems, but in the face of every difficulty she always finds a means that makes the effect bearable. Such means systematically contributes to increasing costs.
For example:
The duration of tool changes. “Wilson's formula” that allows determining the minimum quantity of parts to be treated by a machine between two consecutive tool changes.
The breakdowns of the machines. Constitute security stocks to prevent against the effect of eventual breakdowns.
Quality problems. To achieve the level of efficiency and competitiveness required today, it is convenient to stop dealing with the effects of problems and attack their causes. It is therefore necessary to identify such causes. The key causes are those that are not the consequence of others and that, therefore, should be logically formulated among the real causes of inefficiency; being such:
- Inadequate distribution of machines and routes that are too long Duration of tool changes Faults Quality problems Difficulties for distributors
OPERATIONAL ADVANTAGES PROVIDED BY A STRONG REDUCTION IN STOCK AND TERM
- Increased agility, and better market monitoring
- Ability to deal with urgent orders Quick reaction thanks to shorter lead times Better response to market expectations Ability to plan firm production (instead of planning based on forecasts)
- Reduction of the warehouses for finished, expensive and rigid products Suspension of tasks related to the management, handling, transport, surveillance and protection of warehouses (risks of fire, theft, corrosion, etc…)
- Reduction of rents or possibility of using the area gained for other activities Possibility of optimizing the implementation of activities Elimination of the need to occupy other buildings later due to extension of the activity
- Greater visibility Reduction in the number of information to be taken into account Better circulation of information Reduction in the number of missing pieces Reduction in waste
- To the extension of the premises To the warehouse handling equipment: forklifts, containers, pallets, overhead cranes, among others To the storage equipment (traditional or automatic) To the warehouse management computer system
CONCLUSIONS
The goal is to provide customer satisfaction while minimizing the total cost. This is the essence of the " just in time " process. Thus, through a program of continuous improvement (kaizen), the Just-in-time company provides “products of perfect quality, in the exact quantities needed, at the precise moment they are needed, at the lowest total cost of delivery”.
The practice of just-in-time is no longer a competitive advantage, but an imperative need to participate in the market game.
BIBLIOGRAPHY
- Administration with the Japanese Method - Agustín Cárdenas - CECSA –1993 The Toyota Production System - Yasuhiro Monden - Ediciones Macchi - 1993.
As a complement to what has already been expressed in this text, we suggest two videos through which you can learn more about the just-in-time production philosophy and its advantages, as well as the main elements that make it up. The first video (12 minutes) is a theoretical approach to the system and the second (23 minutes) is a documentary that shows how JIT has been applied in a British car producer. Good material to complement and deepen your learning.
